Nokia Buys Earthmine for 3-D in Map Fight With Apple

By Adam Ewing and Peter Burrows -
Nov 14, 2012

Nokia Oyj (NOK1V), the struggling Finnish
smartphone maker, is acquiring 3-D map-technology maker
Earthmine Inc. and revamping its mapping tools under a new brand
name to win back customers from rivals such as Apple Inc. (AAPL)

The Earthmine purchase will help Nokia expand in mapping, a
growing business it considers key to driving smartphone sales
and becoming profitable again. The company unveiled Here, the
brand for its location services and website, at an event in San
Francisco yesterday, and said it has created a mapping app for
Apple’s mobile devices. It will also make its map technology
open to developers using Google Inc. (GOOG)’s Android operating system.

Nokia, which started selling its flagship Lumia 920
smartphone this month, is promoting location features to
differentiate itself from Apple and Android devices. Nokia,
which bought Chicago-based map provider Navteq for $8.1 billion
in 2008, also competes against Google in providing maps to other
companies, and has customers including Amazon.com Inc., Yahoo!
Inc. (YHOO), Daimler AG (DAI)’s Mercedes-Benz and Nikon Corp. (7731)

“There are two big assets, really good assets, when it
relates to location-based services in the world and we have one
of them,” Nokia Chief Executive Officer Stephen Elop said today
in Barcelona at a conference organized by Morgan Stanley.
“We’re going to be far more aggressive in making that available
and visible to consumers.”

Nokia shares rose 2.5 percent to 2.18 euros at 4:31 p.m. in
Helsinki. The stock has fallen 42 percent this year, giving the
company a market value of 8 billion euros ($10.2 billion). The
company, once the smartphone market leader, has lost about 90
percent of its value since Apple introduced the iPhone in 2007.

3-D Mapping

The purchase of Berkeley, California-based Earthmine will
give Nokia a new way to collect three-dimensional data to
improve its location offering. The deal is expected to close by
the end of this year. Nokia, based in Espoo, Finland, didn’t
disclose financial details of the acquisition.

While Nokia has been playing catch-up with its smartphones
after the success of Apple’s iPhone, it continued to pump money
into its location and services business and now has navigable
data for at least 100 countries, up from 27 at the time of the
Navteq purchase. Its new cloud-based location service will soon
be available for operating systems beyond Microsoft Corp. (MSFT)’s
Windows Phone software that powers Lumia smartphones.

“This is Nokia finally realizing a vision they’ve been
working on for a long time,” said Van Baker, an analyst at
Gartner Inc. “They’ve probably got the best maps on the market,
and they’re a lot further down the road” in presenting
information specific to each user’s life, Baker said.

Apple App

Nokia posted its sixth straight quarterly loss last month
as its third-quarter net loss widened to 969 million euros
($1.23 billion) from 68 million euros a year earlier. The
adjusted operating margin at Nokia’s location and commerce unit
was 14 percent on sales of 265 million euros. At the time, Elop
said this quarter will “continue the transition” as Nokia
brings out new Lumia models and will be “challenging.”

A mobile version of Nokia’s Here location-services
application, which will include offline use, voice guidance and
public transport information, will be available from Apple’s App
Store in about two weeks, pending Apple’s approval.

“On the chance that there might be a few iPhone users that
want a different map,” Peter Skillman, Nokia’s head of user
experience design, said at yesterday’s event.

LiveSight

Apple’s own mapping app, which replaced Google’s maps in
the latest iteration of Apple’s iOS mobile software, has been
criticized as being unreliable and lacking features.

“A lot of people don’t trust Apple’s maps right now,”
Gartner’s Baker said. He said Nokia has six to 12 months to
attract Apple customers to Here before Apple improves its own
mapping service.

Nokia’s application programming interface for Here will be
available to Android developers early next year, the company
said.

Lumia smartphones include City Lens, which uses so-called
augmented-reality technology, allowing users to hold up their
phone to see tips on stores and restaurants. City Lens will now
offer LiveSight for 3-D mapping images. The phones also include
driving and public transport instructions with turn-by-turn
guidance and offline maps.

“The location services -- the mapping, the navigation, the
augmented reality -- are primary differentiators for our
devices,” Elop said in an interview yesterday. “The best and
first experiences will show up on Nokia’s devices.”

Michael Halbherr, head of Nokia’s location and commerce
unit, said last month the market is focusing more on precision
in maps after Apple was criticized over initial errors in its
iPhone navigation software.